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(Sharecast News) - Galileo Resources has entered into a joint venture agreement with private Zambian company Statunga Investments, it announced on Thursday, which holds the Luansobe Project.
The AIM-traded firm said the project consists of small-scale exploration licence 28340-HQ-SEL, covering an area of 918 hectares and granted on 16 February, with an initial four-year term expiring on 15 February 2025.
It said the principal shareholders of Statunga were Zambian businessmen.
The company said the Luansobe area is situated 15 kilometres to the northwest of Mufulira Mine in the Zambian Copperbelt, and forms part of the northwestern limb of the northwest-southeast trending Mufulira syncline.
At Luansobe, mineralisation occurs over two contiguous zones, dipping at 20 to 30 degrees to the northeast over a strike length of about three kilometres and to a vertical depth of at least 1,250 metres.
The top 30 metres from surface was reported to be leached, with oxide mineralisation occurring below that depth to about 70 metres below surface.
Galileo said the agreement provided it with the right to earn an initial 75% interest in a special purpose joint venture company to be established under Zambian law to, with ministerial consent, acquire the licence and the technical and other information and assets related to Luansobe, by making an initial payment of $0.2m and a second equal payment in the initial period ending 20 February 2022.
It would also issue five million shares to the vendor.
During the initial period, Galileo said it would conduct further due diligence in relation to Luansobe, and could at its sole discretion at any time before the end of the period give notice to the vendor if it chose not to proceed.
"We are very pleased with the addition of the Luansobe brownfield Project within the Zambian Copperbelt, with the project situated directly along strike and in close proximity to the very large Mufulira mine," said chairman and chief executive officer Colin Bird.
"The project area has been tested by numerous drill holes in various campaigns from 1921 to 2007, with semi-continuous mineralisation reported along about three kilometres of strike and to at least 1,250 metres depth."
Bird noted that historical reports suggested the potential for "very significant" copper resources of up to 20 million tonnes at 2.51% copper.
"Galileo proposes to undertake a substantial drilling programme to update the reported resource to JORC-compliant status with the twin objective of delineating a near-surface copper oxide deposit with early development potential and an underlying sulphide deposit for larger-scale development."
At 1445 GMT, shares in Galileo Resources were up 14.36% at 1.12p.
21 Apr 2016 13:16